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Home > The Share Centre Blog > 2013 > January > As the technology revolution begins to pick up steam, is IBM the company to watch?

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As the technology revolution begins to pick up steam, is IBM the company to watch?

Chance. There is a lot of randomness in the world, and often more so when it comes to innovation. How could anyone have predicted the rise of Facebook? Well that would have been impossible. But some companies we have all heard of will be the ones that benefit from the next wave of innovation. How do you pick the winners? In my view, look at the ones that are experimenting; that are trying lots of different ideas; the ones whose names keep popping up when you read about some new miracle product. Today, I am looking at IBM.

The thing about IBM is that it got a drubbing. “I am IBM. I don’t need to worry about software, or other companies making products that are compatible with my products. I am IBM. I am the greatest.” Big Blue may not have expressed those views precisely, but that is the gist of the philosophy that dominated the company back in the days when Microsoft was busily destroying IBM’s empire. Such was IBM’s might, that Stanley Kubrick’s film ‘2001 A Space Odyssey’ featured a super computer that became self-aware was called HAL – which is IBM one letter removed.

IBM was the inventor of the Golf Ball typewriter; it was an innovator without peer, which developed an unhealthy tendency towards arrogance. I experienced it first-hand. This was in the day when IBM was still being thrashed by Microsoft. I worked for a company which had agreed a deal with IBM, and my job was to find companies willing to partner us. When we told them that IBM was behind the project they fell over themselves to get involved, then when they saw the contract Big Blue wanted them to sign, most backed-off.

But over time IBM learnt.In many ways the open system that is LINUX is the antithesis of what IBM used to stand for. So the old fashioned IBM was about proprietary software and hardware. Microsoft was about creating a system that third parties could work with. LINUX is about creating a free open system. LINUX, by the way, stands at the core of the Android phone, and in my view will replace Microsoft’s operating system in the PCs of the future – if indeed we have PCs. But what IBM did was work with the LINUX community. It threw its expertise at trying to develop a free system. There was no obvious commercial gain. It just worked with other researchers for no obvious profit. But, by working in this way, IBM secured the trust of the LINUX community, and was able to work even more closely with other innovators. IBM did also gain expertise. Today it is able to sell that expertise to companies. It was a bold strategy, but has appeared to work, and IBM’s consultancy business has raked in the bucks.

At the time of writing IBM’s market cap is $229 billion, making it the world’s fifth largest corporation by market cap. For a while last year it enjoyed a higher market cap than Microsoft, but lost out when the software company launched its new Windows product and Surface. But for me, the IBM story is only just beginning to get interesting. If you are regular reader here, you will know I believe we are at the early stages of a new technological revolution that genuinely will transform the world. I’m not sure if it will transform the world for better or worse, however. What I can say is that some investors will come out of this revolution with very great rewards indeed. You can’t predict where the little companies that turn into giants will come from. That is impossible. But you can make an intelligent guess as to which of the big companies will come out as winners.

For some time, I have been coming around to the view that IBM is the company to watch. Its name comes up time and time again whenever new innovations are mentioned. As I write these words, it is in the headlines for applying the science it uses to produce semiconductors to develop an antimicrobial gel for fighting the so called superbugs that have contaminated many hospitals. See the ‘FT’: IBM develops gel to fight infections is also working at the forefront of nanotechnology. As was covered here last year, it is working on a generation of computers that will be able to simulate touch and feel. See: A new technology boom?

Another area that interests me is genetics, and sequencing DNA. Well, IBM is trying to combine nanotechnology with genome sequencing. See: Nanotechnology for DNA Sequencing Then of course there is 3D printing and there are no prizes for guessing who is at the forefront of this technology.

I don’t know which, or indeed if any of these technologies I refer to here will create a new world beating opportunity for IBM. But I think there is a good chance one of them will. If you believe in innovation, and believe in randomness , then IBM is for you if you are willing to take a chance.

These views and comments are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees

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